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PFGBest Accounts Frozen (PFG scandal big thread)
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PFGBest Accounts Frozen (PFG scandal big thread)

  #391 (permalink)
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karoshiman View Post
I would have agreed to your statement to not over-react after the MF Global incident, but now, from my point of view there can be no such thing as over-reaction.

If it is a major concern, stop trading futures and just trade equities and ETFs with SIPC coverage. In other words, you have a choice, it is up to you.

Mike

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  #392 (permalink)
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Big Mike View Post
If it is a major concern, stop trading futures and just trade equities and ETFs with SIPC coverage. In other words, you have a choice, it is up to you.

Mike


Yep, I'm considering this already.

But first, I will check futures regulation in other jurisdictions.

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  #393 (permalink)
 Vendor: www.traderwerks.com 
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karoshiman View Post
You are right Mike with the hedge funds. On the other hand, brokers which have also a decent amount of hedge fund money, and hence, are not impacted by such campaign, might be the more secure brokers anyway.

I assume that the smart money is not only smart when it comes to participation in the markets but also when it comes to broker selection. At least smarter than we retailers are...

I would have agreed to your statement to not over-react after the MF Global incident, but now, from my point of view there can be no such thing as over-reaction.

Not only hedge funds, but hedgers. The hedgers that use the markets to manage their risk. We often forget about them, but they are the reason that speculators are needed to provide liquidity.

There are a lot of farmers that use to markets to hedge part of their risk and they need to be in the market everyday with overnight margin. Not to mention all the other users for futures contracts, like transportation companies, manufacturers and exporters..

Math. A gateway drug to reality.
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  #394 (permalink)
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traderwerks View Post
Not only hedge funds, but hedgers. The hedgers that use the markets to manage their risk. We often forget about them, but they are the reason that speculators are needed to provide liquidity.

There are a lot of farmers that use to markets to hedge part of their risk and they need to be in the market everyday with overnight margin. Not to mention all the other users for futures contracts, like transportation companies, manufacturers and exporters..


That's right. These are the only ones who have to be in the markets.

Though, in financial futures it's mutual funds and similar participants who are the hedgers.

And by the way, the hedge funds can only keep staying in the markets as long as their investors don't put pressure on them. I'm sure one or the other investors will at least ask their hedge fund manager or CTA questions about their funds security, if not pull money out until the situation in the US becomes safer as it is now.

Just remember rule number one in trading: Protect your capital at all times! For me, this means also staying out of the market, if there is a risk I cannot fully assess...


Last edited by karoshiman; July 13th, 2012 at 07:19 AM. Reason: Added the last sentence.
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  #395 (permalink)
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Big Mike View Post
The problem with that, is that one medium sized hedge fund probably has an account balance equal to 1,000 well funded typical retail traders.

And they aren't going to do as you suggest, because they need to be in the market every day.

So in other words, the impact of retail money alone wouldn't be enough.

I think, first and foremost, don't over-react.

Put pressure on your FCM but I would put just as much, if not much more, pressure on your Congressman. Because that is where the real solution needs to come from, in terms of SIPC type insurance for futures accounts.

Mike

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  #396 (permalink)
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Figures that make me dizzy or who audits the NFA?

I just thought about the NFA Assessment Fees and charges and ordered fines they receive.

The NFA assessment fee, payable by FCMs with respect to futures contracts, is $.02 per side, invoiced to customers.

After taking a short look at the publications of the CME regarding just of their futures volume, these numbers made me really dizzy.

With due regards to these huge sums, shouldn't be indicated that "someone" audit the NFA too; simply put are they have been audited? Then also, do they release figures or balance sheets to the public? What happens with all the monies?

I then took a look at the current Opportunities for carreers at NFA. Either they just started now to raise the requirements for positions or they maybe aren't able to hire the right people. A Bachelor's degree in Accounting requires also the ability to anticipate and respond to suspicious practices and analytical and communication skills. At least the latter requirements weren't available at that time. Nobody was able to "anticipate" that this theoretically could be possible and no one also had the "communication skills" to pick up the phone to verify the statements. Seemingly it doesn't matter if it's a top-tier company with triple digit millions of customer assest or a little rat-shop-broker in a one-horse town.

I mean this task could have done the customer himself. Just asking the broker to provide a statement of the bank who helds the segregated accounts, that there is everything in line. Would have this made the customer feeling more reassured? No one pays the customer for that, why would he pay some one else for the same? Only if one can go beyond that, right?

In relation to that, insurance companies send investigators across the states for claims that are one-thenth of a percent and a lot of them have by far less revenues then the NFA.

I think insurance could help, because it's in the interest of the insurance company to prevent the insurance case. Let them do the job when it comes to risk analysis. Therefore they would do very much more, for less premium to audit the way it has to be done. Just one condition of insurance: "If the customer can't withdraw his money due to regulatory actions, this case is coverd by the insurance." Plain and simple.

I've read that it could be more complicated than MF Global because it appears there is fraud involved, based on the CFTC complaint. But this frees the regulators only, if they did everything, I mean at least everything one avarage simple-minded person would do in a regulatory position. If not, there could be possibly someone else to sue with at least sufficient estate to fully satisfy claims...

There have to be made deeply changes in the system, now an immediately. But foremost, the customers have to be compensated to restore the trust!

Just my opinion...

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  #397 (permalink)
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Serninja View Post
I just thought about the NFA Assessment Fees and charges and ordered fines they receive.

The NFA assessment fee, payable by FCMs with respect to futures contracts, is $.02 per side, invoiced to customers.

After taking a short look at the publications of the CME regarding just of their futures volume, these numbers made me really dizzy.

With due regards to these huge sums

I believe that most members, institutions etc are exempted from the NFA fee. Not sure if it is just equity/clearing members or all rule 106 firms.

Mike

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  #398 (permalink)
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karoshiman View Post
I know how to solve this problem.

We organize a mass campaign with thousands of retail traders and schedule a week (across all known forums), in which we all pull out all our money out of our brokerage accounts (whether futures, securities or forex) and transfer it to our regular bank accounts.

That way, the weak brokers and the fraudulent ones will probably collapse and the good and strong ones are filtered.

Though, I don't know whether one week is enough for this, but I'm sure that this would have an impact. At least, the companies would start to take their self-regulation finally serious. I would be willing to do this even for a month (take a holiday, do something else in the meantime... I know, this might be difficult for some ).

What do you think?

I mean, what else can we do?

The suggestion to spread your capital across many brokers in order to spread your risk might make sense from an individual point of view. But in the aggregate, that way the weak and fraudulent ones are only kept alive longer, as they get also money from new accounts opened by traders from other brokers.

The problem with this is if the account is in an IRA (individual retirement account)......you pull the money out and the tax man penalizes you 10% of it.

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  #399 (permalink)
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TOS/TDA Protection Example

This is what I learned regarding how futures accounts are not/are protected at TDA/TOS:

"So, futures accounts do not have any sipc coverage of any kind. That's industry wide. What we do is we do sweeps from our omnibus account into your brokerage account daily of excess funds. The funds swept into the brokerage account are then covered. Also, we have an omnibus account with Penson. This basically means that we have an account with penson, not you. Say we have 3,000 clients all with 10k margin reqs. We need 30 mil. in our account overnight to cover this. If something goes wrong at penson, we can move our account to another futures broker as the account is an omnibus account at a brokerage level. There is separation of client funds and the clearing firms funds regulation, we monitor this on our account also.

We obviously have a good relation with Penson, and I don't want you to view any of the above as anything negative on their end but we do have our own risk department that monitors all of this stuff."

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  #400 (permalink)
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TradeFlightPlan View Post
Say we have 3,000 clients all with 10k margin reqs. We need 30 mil. in our account overnight to cover this.

This is false based on my understanding. If 1,500 people are long ES and 1,500 short ES, as an example, then those 3,000 customers have posted full margin (lets pretend it is 10k margin, so 30 mil in his example).

But the FCM's net exposure is 0, and the margin required by the clearing firm will be minimal in that scenario.

That leaves a lot of money "available" in those segregated accounts...

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
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